Inflation, Rising Interest Rates and The Real Estate Market
Inflation, rising interest rates, a crazy real estate market. These are the key terms we have all heard as we head deeper into the Fall of 2022. It’s easy to hear these talking points and let fear and confusion and even some real truth cloud our minds where we can’t even think clearly on what all of this means. So let me do my best to explain what this means for everyone, because after all, the real estate market affects us all whether or not we own a home.
For the renter – this is a tough season and I truly feel for you. You can stay put and keep renting or you can go out into the buyer world and try to find a home. If you stay put, rents continue to climb even more rapidly than home prices. If you start the home buying process, interest rates continue to rise also and it can feel like you are paying so much more than your friend who bought a year ago, because you are. So how should you think about this? First and foremost, what matters is what’s best for your family. Don’t just rent or just buy just because, that’s not smart. Use wisdom. Here’s my suggestion for you, and take this with a grain of salt because I’m a real estate agent and absolutely believe in homeownership, remember that you are always building wealth for someone. In this case, you are either building wealth for your landlord or for yourself. I know interest rates are high, and they really are, but renting is 100% interest. You will never see that money back, ever. The only one who benefits is your landlord. The terms mortgage and rent all equate to the same thing – you have to have money each month to live somewhere – I’d rather that money be spent investing in your own future not the future of the landlord. If you are willing to step up and take on the responsibility of having a house to care for, there is no better way for you to start setting yourself up well financially like owning a home.
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For the current buyer – hang in there and remember why you started your home search in the first place. Was it because you wanted a low interest rate or was it because you wanted a bigger yard for your kids to play or you wanted to be closer to your parents or you wanted to stop paying a landlord and start paying yourself. Hold on to that motivation and don’t let the external factors change your goal. We never change our goal we just change our tactics. And don’t let ego get in the way. You may have been able to afford $50,000 more just six months ago and that’s admittedly tough but the only way that stops you is when your ego says “I deserve more than this.” You have two accounts – a bank account and an ego account – you can only deposit into one or the other so choose wisely. If you have to adjust the price point and the house you were looking for then adjust. If you have to search a little broader location then do it. If you have to negotiate a little harder then negotiate. Never lose sight of the goal and keep working at it. Ego kills goals but determination achieves them.
For the current seller – have humility, the market has changed. It’s so hard when we know what our friends’ or coworkers’ experience was with selling their home or how much money they got when they sold but the market is different now. Don’t allow yourselves to get caught up in outdated data but trust in the current truth of the market. Emotions are not your friend in selling. Your home is worth what the current market is willing to pay for it – nothing more and nothing less. In a market with volatile interest rates the sellers who are willing to negotiate and willing to be nimble and willing to not overprice will sell. Hold on loosely to what you “think you should get” and be realistic based on all the factors. Put yourself in the buyers’ shoes and all the craziness they are experiencing with rates and be sympathetic. That doesn’t mean bend over backwards to give them what they want but it does mean seek a win-win solution. This market is not a seller’s market anymore. It’s not 2021 when you receive 10 offers in 2 days and they are all way over list price. Be patient, reset your expectations and be ready to negotiate fairly.
No matter the market there are still wins for everyone out there who is willing to play by the rules, have proper expectations and think beyond the talking points of the day. Interest rates are high, that’s true. Inflation is high, that’s true. The real estate market is tough, that’s also true. Not all good things come easy. Lots of good things come hard. What was your purpose for moving in the first place? Hold on to that, adjust as needed and make your goal into a reality.
If you want to learn how to position yourself well to buy or sell a home in Hampton Roads, Virginia reach out to us at www.maroongroupva.com/contact-team